BlockFi, a popular crypto lending platform, has slashed interest rates by half for some of the market's cryptos held by non-US clients.
Interest rates for Solana deposits will fall from 10% to 5% as of June 1, while rates for Avalanche (AVAX) and Polygon (MATIC) will fall from 10% to 5% and 11% to 5%, respectively. The company outlined its planned changes in a post on May 26.
BlockFi's move is a reflection of the dynamics in the crypto market. BlockFi, which lends funds to institutional investors and returns yields back to their clients, saw a 1,711% increase in assets under management in 2020. In March of last year, BlockFi held $14.7 billion in its BlockFi Interest Account.
But such growth has since declined with institutional investors borrowing less amid a downturn in crypto prices. This declining demand isn't limited to BlockFi, with the current state of the market limiting the ability of lending platforms to offer customers higher returns.
BlockFi used to offer 6.25% to users holding more than one BTC, but now it offers just 1% to 3% on up to 0.35 bitcoin, and 0.1% more on larger amounts, as The Block recently reported. BlockFi's Thursday announcement made no mention of BTC rate changes.
Joe Hickey, BlockFi's head of trading, recently told The Block despite rates dropping, he predicts yields will bounce back.
"People are continuing to invest and I think it's kind of a short-term phenomena and that we're going to see yields in the second half of the year going higher again," he remarked.